TBA Law Blog


Posted by: Lynn Pointer on Sep 26, 2013

The U.S. Small Business Administration published a rule that will curb prime contractor bid shopping of small businesses on federal contracts. The July 16 rule requires a prime federal contractor to notify in writing its contracting officer if it does not use for contract performance a small business subcontractor it used in preparing its bid or proposal. The new rule took effect on August 15, 2013. The new rule deems a prime contractor to have “used” a small business subcontractor in preparing its bid or proposal if:

(i) The offeror references the small business concern as a subcontractor in the bid or proposal or associated small business subcontracting plan;

(ii) The offer has a subcontract or agreement in principle to subcontract with the small business concern to perform a portion of the specific contract; or

(iii) The small business concern drafted any portion of the bid or proposal or the offeror used the small business concern’s pricing or cost information or technical expertise in preparing the bid or proposal, where there is written evidence (including email) of an intent or understanding that the small business concern will be awarded a subcontract for the related work if the offeror is awarded the contract.

The new SBA rule also:

? Prohibits the contractor from prohibiting a subcontractor from discussing any material matter pertaining to payment or utilization with the contracting officer.

? Requires a prime contractor to notify its contracting officer in writing when it reduces payments to a small business subcontractor or when payments to a small business subcontractor are 90 days or more past due.

? Clarifies that the contracting officer is responsible for monitoring and evaluating small business subcontracting plan performance.